2023-12-18 16:09:33
The US dollar weakened once morest the euro on Monday, extending last week’s slide, as the US currency remains under pressure from the Federal Reserve which last week signaled the possibility of a rate cut. interest next year.
The dollar was higher once morest the yen as the Bank of Japan (BOJ) began a two-day meeting that might prove crucial in determining the timetable for ending the central bank’s ultra-loose stance on interest rate.
Bets that the Fed will cut its benchmark overnight interest rate by a quarter of a percentage point at its March meeting soared last week following the U.S. central bank left its benchmark rate unchanged in the 5.25%-5.50% range and that officials have planned cuts of three-quarters of a percentage point next year.
In the meantime,
political leaders of the European Central Bank
do not plan to change their messaging on the need for high interest rates before their March meeting, which would make it difficult to cut rates before June, seven people familiar with the matter told Archyde.com.
“The Fed, which has failed to counter the aggressive repricing policy we have seen over the past six weeks or so, has allowed further easing of financial conditions,” said Michael Brown, a market analyst at Trader X in London.
The Federal Reserve has not previously committed to reducing interest rates quickly, and the increase in market expectations in this regard is at odds with the operation of the US central bank,
Austan Goolsbee, president of the Chicago Fed
said Monday.
Mr. Goolsbee is the latest in a series of Fed speakers who have bucked financial markets’ expectations regarding how quickly the central bank will make rate cuts, including Cleveland Fed President Loretta Mester , John Williams, of the New York Fed, and Raphael Bostic, of the Atlanta Fed.
“The number of reactions following Powell’s press conference clearly poses a risk to downward sentiment on the dollar, although these reactions to the idea of cuts as early as March appear to be falling for the moment fell on deaf ears,” Mr. Brown said.
The dollar index, which measures the strength of the currency once morest a basket of six currencies, was
0.04
% lower at
102.58
. The euro was down
0.2
% once morest the dollar.
The yen fell on Monday but held near recent highs as the Bank of Japan (BOJ) began a two-day meeting that might be crucial in determining the timetable for ending the ultra-free stance. of the central bank on interest rates. The dollar was up 0.56% once morest the Japanese currency, at 143 yen.
The Japanese currency has seen a few weeks of volatility as markets scramble to determine how soon the BOJ might end its negative interest rate policy, with comments from Governor Kazuo Ueda this month first triggering a sharp rise in the yen.
This trend then reversed when it was learned that a policy change was unlikely as early as December, and investors are now awaiting Tuesday’s BOJ decision for further clarification on the bank’s interest rate outlook.
Regardless, since hitting a multi-decade low once morest the dollar at nearly 152 points in November, the yen has gained regarding 6% in value as traders increasingly convinced that the BOJ’s low rate policy will not last much longer.
“This change in sentiment will no doubt be welcomed by the Bank of Japan and, to some extent, help it with respect to the weak yen ahead of tomorrow’s rate decision,” said Michael Hewson, a strategist at CMC Markets.
“There is now less reason for them to think regarding changing their current policy, although they may hint at starting to execute some form of change early next year.”
Elsewhere, the Australian and New Zealand dollars, which can often serve as barometers for investors’ appetite for risk in the currency market, traded little changed on the day but remained near their highest respective 5-month highs once morest the American currency.
The pound stood at
0.26
% less once morest the dollar, at $1.26465
1.26465
The pound was down 0.26% once morest the dollar, at $1.26465, as the prospect of higher interest rates in Britain than in most other major economies next year brought some support for the British currency.
Bitcoin was roughly stable for the day at $41,384
41,384
.
1702920305
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